I have this problem, it has happened consistently in 2 or 3 specific places in the game so far.
After watching it happen a few times, it looks like the textures beyond a certain point in the game environment disappear, when I enter the blur a loading screen appears and remains until I ctrl alt delete and end process.
I've tried the Mouse fix
I've tried the 60fps override
I've tried the 600x800 desktop resolution fix
I've tried turning the graphics right down
I've updated my motherboard, graphics card, chipset and sound drivers
I've tampered with catalyst AA features
Intel Dual Core E5200 2.50Ghz
Intel P45 chipset
ATi Radeon HD 4850
ATI HDMI Audio
4 GIG of RAM
Windows XP Professional (32 bit) SP3
After going through a string of problems. I am now stuck on this one. First I encountered freezes whilst attacking the Lt at Gentek. Then after rolling back beta drivers, and reinstalling DX9 from MS's website (not the disk) then Prototype, I came up against corrupt saves (I guess, the game just froze immediately after loading the game and placing me on the map). Then, after restarting, I got this.
I have found a useful tidbit of info though. If I go to the game folder in my Program Files (x86) and remove 01audio.rcf (by say, moving it to desktop). the game loads up fine, but with no sound and then freezes at the end of the loading screen. Probably cos its looking for the sounds, so this is definitely a sound related thing.
So I ASK EVERYONE, Could you please state your sound card when you post plz.
Mines a Soundblaster XF-i ExtremeMusic.
Running a AMD x2 6000+
an 8800GT 512, and $GB of RAM on Vista 64